1. How many recommendations do you make per month?
2. What strategies do you use in your trade?
3. Do all your recommendations make money?
4. Do I need a big account to profit from your recommendations?
5. What if I can't get your recommendations filled?
6. Does MarketNeutralOptions provide auto-trade service?
7. When do you bill me?
8. What is the minimum recommended amount to start as a small trader assuming 4 trades per month?
9. When do you normally send recommendations? Is there sufficient time to execute the trade?
10. What kind of iron condors do you use?
11. After receiving your second trade recommendation, I was not able to get my positions filled. Will I be billed for trades that I did not enter?
12. Can you automatically bill my Paypal account or credit/debit card each month?
13. How does one pay or settle the bill?
14. How is one being billed? Do I have to inform you when I enter a trade?
15. How does one open a trading account to trade with MarketNeutralOptions?
16. Do you charge a fee for using Autotrade at thinkorswim? If so, how much is it? Is this a one off fee or a monthly rate, or is it included in the fees you charge already?
17. How much money is usually needed for your average Double Diagonal trade?
18. Why don’t you just do iron condors every month instead of double diagonals?
    Also why don’t you use SPX (which is European style) to do condors/diagonals
    instead of SPY, IWM, etc that are American style which can get assigned any time?

Answers

1. There is no fixed number of recommendations per month. There may be more recommendations this month but less next month. It all depends on the market conditions. We want to avoid high-risk positions. As such, we'll shy away from entering new positions when market conditions are not favorable for profitable trades. On average, we posted about 4 to 5 trade recommendations per month.

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2. We use popular market neutral option strategies such as the Iron Condor and Double Diagonal for our recommendations. We trade mainly index-tracking ETFs such as SPY, DIA and IWM as well as index options such as SPX and RUT. As you may know, a Double Diagonal turns into an Iron Condor after rolling. So our portfolio will have a mixture of near month Condors and far month Double Diagonal. Since Iron Condors are short vega and Double Diagonals are long vega, we should be sheltered from massive volatility risk.

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3. No, we won't promise that all our recommendations will make money. But, of course, we try to win more than we lose. We're not in the business of speculating market directions, we aim to achieve consistent monthly income through time-decay. So far we are able to achieve on average 30% to 40% returns per trade.

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4. Our recommendations are suitable for both small and big accounts since the margin requirement is kept low (normally about $100 to $800 per trade). For big account holders, you can put on more trades while smaller account holders can put on 1 or 2 trades.

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5. Our recommendations are sent to you real-time. The price indicated are also real-time. We only send out an advisory after we get filled at the target price. The price we indicated in the advisory is the price we are filled in our personal accounts. However, market changes constantly. You may be able to get a trade for $0.10 this moment but have to pay $0.20 for the same trade the next moment. The indicated price in our recommendations are the best offered price and should be able to get filled. We recommend you execute the trade at the indicated price or better but not worse. For example, there is a trade that will cost you $0.15 today but you are not filled today. You can try for the same trade again the next day if and only if you can get it at the same price of $0.15 or lower. The same works for credit trades; you should execute the trade only if you can get a better fill.

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6. Yes, we currently offer auto-trade service for subscribers with ThinkorSwim or Synergy accounts. Auto-trade service is free of charge.

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7. The bill will be sent to you every fourth week of the month, after options expiration. The bill will include details on the profit or loss for all the positions closed for that month. Any closure of position after the current month's expiration will be included in the next month's bill. For example, August expiration has just passed and you received a recommendation to close a September position during the fourth week of August. This trade to close the September position will not be included in your August bill even though you executed the trade in August. Since it is executed after August expiration, it will be included in your September bill.

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8. Our advisory service is suitable for both small and large account. Each trade may requires a margin of between $100 to $800. Very rarely do we need more than that for each trade. You can put up 1 trade per recommendation or any number you are comfortable with. But we advise you to not risk more than 10% of your trading capital on each trade. If your trading capital is around $5000, we recommend that you put not more than $500 for each trade. But again, it all depends on your risk appetite.

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9. We send recommendations real-time as we find them during market hours. Because our trades are short to medium term, the recommended price will normally be there for 1 or 2 days. For example, we may be looking at a Iron Condor for $1.00 at the moment, but the next moment it could be trading at $0.95 or $1.05. We advise our subscribers to try to get filled at the recommended price. If the price difference is not that great, it may still be a viable trade even after a few days. You don't really have to stay in front of the computer all day waiting for our recommendations, you can try to enter the trade a day after our recommendation and still get the same price or better. However, do note that market volatility may cause the price to move rapidly. In cases like that we recommend that you give this trade a miss if you can't get it at a better price.

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10. Mainly I use two types of iron condor. One type of IC is to look out for a 1:1 or nearly 1:1 risk/reward. We normally do this on liquid ETFs such as SPY, DIA and IWM. Examples of these type of iron condors will be the IWM iron condor initiated on 23 OCt 2007. We are risking $1.05 for a potential profit of $0.95. This is nearly 1:1. Obviously, probability of success will be near 50% as well. With so high a probability of success, we can afford to be a bit more patient and optimistic.

    However, we also like to limit our losses should the position turns against us. We’ll set our stop-loss at about 20-30% of our potential profit. For example, if we are risking $1.05 to make $0.95, our stop-loss will be around $1.20 to $1.30. That is, we’ll close up or roll up the trade when the position is trading at $1.20-$1.30. Alternatively, we’ll look to closing it during the last 2 weeks before expiration or when the position is trading at $0.20 or less.

    The other type of iron condor we put up here is the 1-standard deviation type. Around 30-35 days before expiration, we’ll put up an iron condor on RUT or SPX. The biggest problem with these indices is getting them filled. These iron condor will not offer 1:1 risk/reward but they’ll have very good probability (1 SD is 68%). In fact, the risk/reward for these type of iron condor is very bad. For example, we sent out an advisory on RUT IC on 8 Oct 2007 for a $2.30 credit (we are risking $770 to make $230). But we have a probability of about 64.61%. These type of iron condors require constant care. The moment the underlying moves too close to our short strike (usually around 10-15 points), we’ll close up the trade immediately. At no time we’ll allow these type of iron condor be ITM. The risk is simply not worth the credit we got. Furthermore, because it is so difficult getting these iron condor filled, we have to set our buffer bigger. Indeed, we normally place a mental alarm when the underlying is trading 30 points away from our short options.

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11. This issue does happen from time to time. Unfortunately, there is not much we can do because it is the subscribers’ brokers that execute the trade. To be fair to our subscribers, we only send out an advisory alert after we get filled at the target price. We don’t pick a price from nowhere and send it to our subscribers. We make sure that we can get that price ourselves. However, at times, the market may move too swiftly and the target price may change leading to some subscribers not being able to get filled at the target price. The best way to avoid such problem is to sign up with our auto-trade service with our partner brokerage firms for free.

    Since we are unable to verify if our subscribers enter the trade, we will send the bill to subscribers who received our advisory (if the recommendation makes money). Many advisory service out there charge their subscribers whether they enter their recommendations or not, even if their recommendations lose money. Here at MarketNeutralOptions our subscribers only pay if the recommendations make money for them. Because we cannot monitor who got what filled, we have to bill our subscribers on a on-receive basis.

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12. You will have to pay your first payment of $50.00 manually and $50.00 will be deducted automatically from your credit/debit card or Paypal account every month thereafter. In the event that your bill for a particular month is less than $50.00, you will still pay $50.00 first and we will refund you the difference within a week. For example, if your bill for Jan is $40.00, $50.00 will be deducted from your account first and we'll refund you the $10.00 difference.

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13. We will send a bill via email to you after the expiration day of that month, i.e., after the third Friday of every month. Clearly listed in the bill will be the advisories that you’ve closed for the month and the percentage profit for each trade.

    There will be a secured link for you to make your payment via Paypal if it's your first payment. Subscribers will have to settle the bill before the 1st day of the next month. If the bill is not settled before the 1st day of the next month, the subscriber’s account will be temporarily suspended. There will be a penalty charge of $15 to reactivate suspended account. After your first payment, late payment will be a thing of the past since every bill from now on will be automated.

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14. Since we are unable to verify if our subscribers enter the trade, we will send the bill to subscribers who received our advisory (if the recommendation makes money). Many advisory service out there charge their subscribers whether they enter their recommendations or not, even if their recommendations lose money. Here at MarketNeutralOptions our subscribers only pay if the recommendations make money for them. Because we cannot monitor who got what filled, we have to bill our subscribers on a on-receive basis. So, no, you don’t have to inform us if you have indeed entered the trade. As long as you receive our advisory, you will be billed for that advisory, if it makes money.

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15. You can open a trading account with any options brokers. We are simply an advisory service. We send you the recommendations you put up the trade yourself. Of course you can sign up for our free auto-trade service with our partner brokers. You can find out more here: http://marketneutraloptions.com/autotrade.htm.

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16. Autotrade is a free service provided by us and our partner brokers. There is no extra charges besides your regular commission rates (to the broker) and your subscription fee (to us).

    Our subscription is based on the performance of our advisories so it varies month after month. But the maximum you’ll pay is $50 for any given month.

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17. Our double diagonal is usually set up with ETFs such as SPY, DIA and IWM. They are normally 2 points wide. On average the reduction in buying power for each DD is between $180 to $230 each. However, sometimes if we can get a good one, we may have a wider DD like a 3 or 5 points wide. This will increase the margin requirement for the DD (increase in the reduction of buying power). But we don’t usually look for DD that needs more than $500 because we don’t want to lock up our capital so much so long.

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18. Double diagonals normally offer better risk/reward than iron condors. When we roll a double diagonal into an iron condor, the amount of credit we collected is often unachievable if we were to simply do an iron condor. Of course, the trade off is time, a DD is held up for a longer period. One more feature of a DD that I like is the chance to get out of a position clean even if the market moves big-time against our position. We usually paid a small amount to initiate a DD, and when the time comes to roll, we may find that the market has moved too close to our short strikes. When that happens, we can simply close up the trade for a tiny loss or even a profit. A DD has a buffer that allows us a margin of error. An IC is shorter term and offers no buffer.

    One more reason why we do a mixture of both here is that IC is short Vega (Greek for IV) while DD is long Vega. The short and long vega from the positions will cancels out each other reducing our exposure to IV risk.

    We do trade SPX and RUT almost every month. We use them mainly for condors. However, because SPX and RUT are only trade at the CBOE, they are very difficult to get filled at the right price. To be fair to our subscribers, we only send out an advisory alert after we can get it filled ourselves. By contrast, SPY, IWM and DIA are traded in most exchanges and thus are more liquid and offer better bid/ask price. Again, we want to strike a balance here and therefore, we trade a mixture of all.

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